Two Steps Back

I am sure you have heard the old saying, "One step forward and two steps back." That is, in my opinion, what the United States economy has been doing over the last several months. It seems as though we start to witness improvements that create enthusiasm that our economy is showing signs of beginning to pull out of the downturn, and then... Wham!, more poor economic news such as last week’s release of the “Employment Situation,” which reported the national unemployment rate at a new high of 6.1%, on the heels of the most recent initial jobless claims report, which spiked back up to 444,000 (although all of the labor news wasn't bad given that in healthcare we have added 367,000 jobs year-to-date). Another good indication of how fast economic sentiment is changing is the fact that all last month experts focused on inflation, and now their concern has changed to deflation. So what are today's headlines, and how will today's changes impact on our economy, good or bad?

Today's headlines are all about the Fed bailing out mortgage giants Freddie Mac and Fannie Mae. Is this good or bad? Wall Street liked the news early as stocks rallied. Most of the articles I have read indicate that this will lead to lower interest rates for would-be homeowners. It would be even better news if it means that folks who are in a tough position given that their short-term rates have adjusted higher could refinance and stay in their homes. Unfortunately for these individuals, the lower rates are going to come with a much higher scrutiny over credit ratings, etc. There is also good news in the fact that folks who are currently living with an adjustable rate, interest only, etc., kind of mortgage who have maintained good standing and have not missed any payments will be able to capitalize on this move by the Fed to lock in a low, fixed rate. If you are in this position be ready to strike once the impact makes its way through your financial institution.

Could this move be the first step in solving the housing crisis after last week's report of foreclosures being at an all-time high? Not yet. It is going to take much, much more to recover, but as I mentioned earlier in this article, it was once again time for the "one step forward" after taking "two steps back" last week.

I personally think that lower interest rates will spur the purchasing of both new and existing homes. Yes, I said it, and, yes, I am an optimist at heart. Even with the high unemployment rate, there is still a group of would-be first-time home buyers that have been waiting for the perfect time to step into the wonderful world of home ownership. I also believe that there is another group, one that is focused on investing, who will also take advantage of the lower rates to scoop a deal on a second home or vacation rental to pad their portfolio with good tax advantages in planning for their future. If both of these scenarios come to fruition, it will be a nice "step forward" again for the economy which could even extend into the labor economy.

Keep a close eye on mortgage rates if you are a potential first-timer, or if you are in the market to refinance. All of the articles I have been reading foresee the 30-year fixed dropping below 5.5%. Let's keep our fingers crossed!

What kind of impact do you foresee the Fed's move to take over the mortgage giants having on your local economy and local labor situation?

Headlines

There have been a lot of headlines in the news of late about the condition of our economy, the fact that we are in a recession, or are on the verge of one, companies laying off workers, hiring freezes, etc. How you lead a business through these kinds of conditions is going to determine the ability for your business to ultimately be successful in the future, or not. One of the immediate moves of a business in a recessionary period is to cut expenses. This is obviously smart and for most businesses is an ongoing practice even in the good times. I was recently emailed a good newsletter distributed by The Recruiter's Digest and written by Bill Radin that I feel outlines some pretty good steps to take, and although they are referring to the recruiting industry, their recommendations can apply across all industries and leadership positions. Here is a copy of the article and a link for you to view it on Mr. Radin's site which also offers other resources and tools for folks in the recruitment industry.

Learning from Past Recessions by Bill Radin (Source: Recruiter's Digest April 2008 newsletter) If you've never experienced a recession, here are 10 things you should know:

1. Jobs that made you rich in good times can make you poor in a recession. This is especially true with mid-level positions, in which duplications in skill sets or job titles exist within a single company.
2. You may need to switch from a "delivery" business model to a "value-added" model. If your business depends on delivering mass quantities of average-quality candidates or you do little to add value, you'll find it harder to compete.
3. Some job markets and desk specialties will be spared. Case in point: After 9/11, when job cuts were rampant across the board, certain job markets, such as defense contracting, construction and legal services, actually thrived. If you can identify the markets left standing, they can be your lifeline.
4. The greater the supply of "active" candidates, the more valuable "passive" candidates become. Since layoffs flood the job boards with unemployed or marginal candidates, you'll need to brush up on your cold calling skills and find creative ways to source top-flight candidates who are currently employed.
5. Employers are more cost conscious. As a result, you can expect more pressure to reduce your fees, and for hiring cycles to slow to a crawl. And as more recruiters fight over fewer jobs, you'll need to tighten up your "ownership" rights to candidates; otherwise you'll fight more frequent battles over who gets paid.
6. Candidate marketing will become more common. Most employers will throw out the rule book if you bring to their attention a candidate who can make an immediate, positive impact. If the candidate has enough sizzle, employers will find a way to make the hire, even if they have to create a special position.
7. Your time management becomes more critical. With fewer positions to work on, you'll need to be highly selective about which assignments will give you the greatest return on your investment of time.
8. Weaknesses in your selling skills are more exposed. Recessions leave little margin for error. The better you are at qualifying, closing, handling objections and making presentations, the more efficient you'll be with respect to converting activities into income.
9. A recession is the best time to be in the recruiting business. I know this sounds counter intuitive. But look at it this way: When times get tough, the weaker recruiters will wash out with the tide. If you can weather the storm and find ways to gain market share and build your reputation, you'll be positioned to grow as the market recovers.
10. Cash flow is everything. Learn to control your spending or make cuts in your budget. Otherwise, you might end up working with your back to the wall.No doubt about it: A recession is a buzz kill. But it can also be a great teacher, because it humbles you and makes you more aware of your weaknesses. If you can stick it out and learn from your mistakes, you'll make tons of hay when the sun shines again, and you'll be more immune to future downturns.

Very compelling!

Now back to my opinions...

If I were to add to the list of ten items above, my contribution would be to increase your level of activities and focus on what has the most obvious link to driving your business. Are sales activities the best driver of your business? Is it association involvement? Maybe even attending trade shows? Find what works best, clear your schedule of all other time consumers and focus on what is going to allow you to build your business. The businesses and leaders that are going to emerge on the other side of the current economic conditions on top of their industries are going to take some calculated risks to gain market share and increase their customer counts. This will be successfully accomplished by being wise with where their organizations focus resources and by taking necessary risks to grow their market share and ultimately their business.

What activities are the most important to your business? Are you investing all of your time focusing on this most important aspect of your business?